The three-year, $482 million rollout is scheduled to begin in Pasadena and continue in stages until 1.3 million analog electric meters are replaced with digital ones and 700,000 gas meters are upgraded by the end of 2014. The utility is mailing letters Monday to all BGE residential and commercial customers, informing them of the deployment.

The installation would roll through Anne Arundel County this year to southwestern Baltimore County and Howard County early next year. The utility will move on to Baltimore next year and the remaining parts of Baltimore County as well as Harford and Carroll counties in 2014.

"We look at this as the most transformational change in the electricity grid in the last 100 years," said Mark D. Case, BGE's vice president of strategy and regulatory affairs. "It is really not overstating it to describe it in those terms."

BGE is shouldering the early costs to install smart meters in homes and businesses under an agreement with state energy regulators. The utility would not be able to recoup its costs through rate increases until 2015 at the earliest, Case said. If those increases are approved, BGE estimates that its customers could pay an extra $1.10 a month on average over a 10-year period.

Even before the installation gets under way, though, BGE officials say it's critical to get customers to buy into the high-tech program.

Some utilities installed smart meters without fully explaining to customers what to expect, how the meters work and how they can benefit from the new technology. That created anxiety over the privacy and security of the data and fears about radio waves emitted by the high-tech boxes, experts say. In California and Texas, customers also have reported outlandish bills and other problems.

"People didn't know what was going on," said Bernie Neenan, a technical executive at the industry-supported Electric Power Research Institute.

More recently, utilities have gotten better at educating customers on smart meters, mitigating complaints, he said.

BGE customers who still have concerns currently cannot opt out of the smart-meter project. The Maryland Public Service Commission, however, plans to consider at a hearing in May whether to require the state's utilities to have an opt-out provision.

BGE has set aside $66 million for education and outreach during and after the installation period. The utility is following a detailed plan approved by the commission, which includes employee training, reaching out to local officials and community groups, and mailing welcome letters and installation notifications.

BGE also has been working closely with AARP and the Maryland Office of People's Counsel, which represents residential ratepayers, on consumer education, data security and meter performance metrics.

"Our priority is to make sure consumers understand what the new meters will do and what they will not do," said Hank Greenberg, state director of AARP Maryland.

BGE joins other utilities across the country installing smart meters to modernize their aging electricity infrastructures. So far, 27 million smart meters have been installed, and that number is expected to more than double to 65 million by 2015, according to The Edison Foundation's Institute for Electric Efficiency.

Pepco, which serves Prince George's and Montgomery counties, has installed more than 125,000 smart meters in Maryland and expects to finish by the end of this year. The utility has 530,000 customers in Maryland.

Smart-meter technology allows two-way communication between customers and the utility. The utility benefits from immediate information about outages and other problems on the grid. The technology also automates meter readings, saving money because the utility would no longer need meter readers.

For customers, the new digital meters are intended to allow them to track and control usage, helping them save on their energy bills.

The project's cost is $713 million, including maintenance and upgrades of the smart-meter technology over 10 years. BGE received a $200 million federal grant to help pay for it.

BGE officials estimate customers could save at least $2.5 billion over the meters' 10-year life. On average, that could mean between $8 to $10 a month for a typical customer, BGE said.

Customer savings would come from the utility's operational savings, which would be passed on to customers. In a few years, customers would be able to use the data to manage their energy use, which also could save them money.